Resentful Britons slow to manage their increasing tax burden

01 July 2008 / by Daniela Gieseler

Eighty-one per cent of Britons believe they are paying more tax then five years ago and 73 per cent of them resent this, a poll of 3,000 people by life and pensions company Friends Provident has found.

When asked for their opinion on why their tax burden had increased, 43 per cent blamed stealth taxes, 60 per cent believed it was because of a general increase in the cost of living and 24 per cent thought it was the result of changes in income tax brackets.

A recent report showed that taxes had indeed risen by 76 per cent in the last 10 years which, after adjustments for inflation, is still a real increase of 50 per cent.

The majority – 64 per cent of respondents – thought council tax had gone up most noticeably, followed by fuel taxes (58 per cent) and road tax (45 per cent).

Worryingly, only a minority of Britons seems to be aware of how much tax they actually pay. When questioned about the forthcoming rise in petrol tax only 36 per cent knew it would increase by 2p a litre, and only 37 per cent knew that the Government takes 62p out of every £1 of petrol you put into your car.

Over half of the respondents were not able to say which tax band they fall under, a third do not know how much they pay in council tax, and just 17 per cent is aware of the inheritance tax threshold.

"The UK public is feeling resentful about the fact that taxes are on the rise, yet many are still unaware of how much they are paying out in tax on a monthly basis," Peter Timberlake, head of public relations at Friends Provident said.

"And nearly half of the people we spoke to have no intention of looking at whether they can reduce their tax bills," Mr Timberlake continued, urging consumers to review their tax payments.

"Just five per cent of those asked said they have opted for the salary sacrifice option on their work pension to help manage tax, but many more people could do this and make a significant difference to the amount they receive when they retire."

The Treasury Committee, meanwhile, reported on the consequences of the abolition of the 10p tax rate, and the subsequent rise in personal allowances for basic rate tax payers.

Committee chairman, John McFall, said: "Raising personal allowances was clearly not a well-targeted way to compensate the losers from abolition, but had the merit of offering a quick solution."

"That said, raising personal allowances is a welcome first step towards creating a simpler tax system with large number of low-income people taken out of the tax system," Mr Fall continued.

He also warned the measures went not far enough: "There are still 1.1 million losing households, many of whom are on low-incomes and who are being hit hard by rising food and fuel prices and the slowdown in the economy. The Government's short-term priority must be to make every effort to compensate these people in full."